Unilever to acquire Horlicks and GSK's Health Food Drinks portfolio

05/12/2018

HUL expects that the transaction will take its food and refreshment business to Rs 10,000 crore turnover.

The deal comprises three major transactions - an all-stock acquisition of GSK Consumer Healthcare India (GSK CH India), an all-cash acquisition of GSK Bangladesh, and the acquisition of certain other commercial operations and assets outside India. GSK will retain a 5.7pc stake in the newly-merged business, but will eventually sell this off.

GSK announced in a statement today that it had agreed to divest Horlicks and other consumer healthcare nutrition brands to Unilever.

Horlicks comfortably dominates the health-drinks market in India and Unilever is expected to try and give it a fresh lease of life, following a slowdown in sales growth in recent years.

Hindustan Unilever Ltd will merge with GSK's healthcare business in India. Following completion of the transaction, now expected by the end of next year, GSK intends to sell down its holding in HUL in tranches.

GSK Consumer's flagship brands Boost, Viva and Maltova brands will now be owned by Hindustan Unilever, while Horlicks is being acquired by HUL's parent Unilever and HUL will pay royalty for its use in India. Sanjiv Mehta, chairman and CEO, HUL, said: "It will add huge amount of lustre to the great brands we already have in our portfolio".

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GSK said India remained an important market for it and the company will continue to invest in growth opportunities for its OTC and Oral Health brands there, which include Crocin, Eno and Sensodyne.

GSK reportedly looked at several other companies as well such as Nestle India, Coca-Cola Co. and ITC. A leader in the malt-based beverages segment, Horlicks holds 43 per cent market share followed by Mondelez International's Bournvita, which has around 13 per cent share. "Both Horlicks and Boost together have 60 per cent share of the category".

Horlicks has a long history in India - which accounts for nearly 90 percent of the GSK arm's turnover in Asia - having been introduced there in the 1930s. "The malted drink category as well as Horlicks has been growing in single digits for the past two years, first due to demonetization and then due to the implementation of GST".

It suggested it is well positioned to further develop the market given the extent of its reach and capabilities.

HUL CFO Srinivas Pathak said at present the company's F&R business is at around '2,400 crore. "HUL already has a huge distribution and sales field force and that will emerge as an area of duplication".

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